Salam,
IFG article (link below) states this test as “Net Liquid Assets = Total Assets – (Tangible Fixed Assets + Inventory) – Liabilities” but then uses cash instead.
- Which one is correct? The formula or cash or both?
- My assumption is that the test is trying to get to the liquid assets number given it’s title - basically the cash plus short term investments. However the formula above doesn’t get you to that number (example below). Is the term “Net Liquid Assets” just an “inaccurate term”?
| Cash | 1 |
|---|---|
| Stock | 2 |
| Debtors | 3 |
| Tangible Fixed Assets | 4 |
| Intangible Fixed Assets | 5 |
| Tot Assets | 15 |
| Tot Liabs | 10 |
| Net Liquid Assets | -2 |